Thursday, June 25, 2009

CDC to invest $10 mn in Rabo's agri fund for India

S Kalyana Ramanathan / London June 25, 2009

CDC Group PLC, the UK's development finance institution, today committed $10 million (Rs 48 crore) to Rabo Equity Advisor's India Agri Business Fund, CDC's first investment under its new investment policy.

Under the new policy, which came into effect on January 1, the lending institution will focus more on investing in the world's poorest countries. Close to 75 per cent of new investments will go to countries, such as India, with an annual gross national income per head of less than $905.

The fund will invest in mid-level companies in the agri-business sector across the entire value chain - farming, logistics, production and marketing. The fund's first investment has been in Sri Biotech Laboratories, which produces organic agricultural products to improve and protect crop yields. The fund expects to make 10-15 investments in the range of $3 million (Rs 15 crore) to $20 million (Rs 100 crore) over a four-year period.

Anubha Shrivastava, managing director, Asia, CDC, said, "Although currently underdeveloped, agri-business in India has enormous potential. The India Agri Business Fund will open new opportunities for India's food companies, which, in turn, will be a great stimulant for economic growth through new jobs, improved infrastructure and economies of scale.”

“Indian agri-business companies, in contrast to their international counterparts, tend to be small and restricted in their product ranges, which leads to high unit cost of production and low global competitiveness. The Indian government's attempts to build food parks, upgrade institutional infrastructure and enable direct sourcing by processes from farmers are designed to address some of these bottlenecks, but private investment will help bridge the gaps in the sector,” said Shrivastava. Since its reorganisation in 2004, CDC has committed over $1.5 billion to South Asia.

The fund will be managed by Rabo Equity Advisor's New Delhi-based team. Rabo Equity Advisors' parent, Rabobank, has ten years of experience in the Indian food and agri-business sector.